A Look At The Language Surrounding Balance Sheet Rundown

Most of the headlines covering the minutes from the RBA's February monetary policy meeting have regurgitated the recent deluge of communique from the Bank.

• In terms of the reinvestment decision covering maturing bonds held under the QE scheme, the Bank has noted that "Members then discussed the reinvestment of the proceeds of maturing bonds. They noted that, in Australia, there are large gaps in the maturity profile of government bonds, which is not the case in many other countries. The next maturity of an Australian Government bond is not until July 2022, which provides the Board with additional time to make a decision. Members agreed that a decision about reinvestment would be made in May 2022, with the key considerations being the state of the economy and the outlook for inflation and unemployment."
• A reminder that before the February RBA meeting there was a view that the Bank would organically reduce the size of its balance sheet by allowing maturing bonds to roll off. This intimates that the decision on the matter is a little more nuanced, fleshing out recent RBA speak on the matter.